The average amount of venture capital raised by the top 25 San Francisco area cleantech companies plummeted 85 percent, to $8.6 million, in 2009 from about $58 million in 2008. It's a trend that's being seen nationwide as VCs show less tolerance for risk.
Taken together, the pullback in Bay Area slashed overall investment in the top 25 deals to $215 million in 2009 from $1.4 billion the previous year, according to San Francisco Business Times research.
In addition to the credit crunch, which made raising certain types of funding nearly impossible, cleantech firms suffered from an unintended consequence of the federal stimulus package in 2009, said Maurice Gunderson, a senior partner at San Francisco venture firm CMEA Capital.
“From January to about the middle of the year, everybody was waiting to see who was going to get government money, so a lot of venture capitalists just sat on the sidelines waiting to see who would win free money,” Gunderson said.
Government money took the place of both venture money and project finance for those firms that could get it in 2009.
Very few venture capitalists are willing to fund supply-side cleantech companies like solar-panel and wind-turbine manufacturers, but everyone is interested in the demand side of cleantech like energy companies.
“It doesn’t mean people aren’t going to fund a deal that takes $100 million or $150 million,” said Kevin Surace, CEO of Serious Materials, which ranked second on 2009’s list, raising a reported $32 million. “But I think (VCs) are unlikely to fund deals that take $1 billion anymore.”
